You work hard to fulfill your work-related responsibilities in Hernando County. For the most part, that effort is individual. Thus, you likely understand the surprise that many of those who come to see us here at the The Day Law Office Office display when they learn that their work-sponsored retirement plans are considered marital property (and therefore subject to property division during divorce proceedings). If the funds placed into a retirement plan are only available due to your own efforts, why then would your soon-to-be ex-spouse have any claim to them?
Section 61.076 of the Florida state statutes says that all retirement benefits are indeed subject to equitable distribution. A closer analysis of the source of the assets that fund these accounts reveals why. Whatever income either you or your spouse earns during your marriage is determined to be marital property. The funds contributed to a retirement account during that same time (whether it be a 401k, an IRA or an employee pension plan) typically come from that income (or from employee benefits, which by definition is also a form of compensation). For that reason, those contributions (not necessarily the entire value of the accounts themselves) are classified as shared assets.
The fact that retirement account funds must be included in property division proceedings does not change the potential tax liabilities that they may be subject to for early withdrawals. That means that if either you or your ex-spouse decides to cash out your share, one or both of you could be subject to tax penalties. It is therefore recommended that your spouse’s portion be rolled into another retirement account, or that you come to an agreement for them to not seek disbursements until you reach the age of retirement.
More information on complex asset division can be found here on our site.